LAS MARGARITAS PROPERTY

Las Margaritas Property

On July 30, 2018, the Company entered into an option agreement with First Mining Gold Corp. (“First Mining”) granting the Company the right to earn a 100% interest in the Las Margaritas property located in the State of Durango, Mexico. The property is located approximately 140 kilometres to the southeast of Mazatlan, Sinaloa and is comprised of two mineral concessions encompassing a total of 500 hectares. As shown in the map below, the concessions lie to the north of Gainey’s El Colomo project and within El Colomo’s overall claim package.

Under the terms of the four-year option agreement, Gainey can elect to make either annual share or cash payments to First Mining in the following amounts:

Upon approval by the TSX Venture Exchange (Received January 25, 2019)

First anniversary date of the agreement (Not Paid)

Second anniversary date of the agreement (Not Paid)

Third anniversary date of the agreement Fourth anniversary date of the agreement

$75,000 in Shares ($12,000 in Cash –$175,000 in Shares ($28,000 in Cash –$250,000 Shares ($40,000 in Cash –$225,000 Shares ($36,000 in Cash –$225,000 Shares ($36,000 in Cash –

VAT) VAT) VAT) VAT) VAT)

N/A

$174,000 in Cash $261,000 in Cash $232,000 in Cash $232,000 in Cash

In addition, as per the terms of the option agreement, Gainey will make annual cash payments to First Mining of USD$25,000 from September 2018 (paid) to September 2020, and USD$250,000 in September 2021 in connection with an existing agreement on the property, and will incur exploration expenditures on the Las Margaritas property totaling USD$1,000,000 over the four year option period. Upon completion, Gainey will obtain 100% ownership of the Las Margaritas project and First Mining will retain a 2% net smelter returns (“NSR”) royalty, with Gainey having the right to buy back 1% of the NSR royaltyfor USD$1,000,000 up until the first anniversary of the commencement of commercial production at the project.